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Background: I own $150,000 of a stock that cannot be traded. It is a Class A preferred stock.
A god friend owns $200,000 of the same stock. So we both think the stock will be worth something when there is an upturn. And the company's plan it to get bought by a lrsrger company.

Question: I want to borrow $20,000 from my friend and use $20,000 of my stock as collateral.
I pland to pay her back with 6 months to a year and want tounpledge my stock to her at that time.. Also, the share certificates are 25,000 each. Would it be easier if i borrow $25,000. What forms do I need?

Submitted: 146 days and 23 hours ago.
Category: Finance
Value: $9
Status: CLOSED

Answer

Dear Friend,

It would be easier for you to borrow $25,000 since the certificates are worth $ 25,000 each.

Against the money borrowed, you can issue a Collateral Note. A Colleteral Note is a A promissory note secured by stocks, bonds, mortgages, or other securities. A " collateral note," of course, may be given by an individual, firm, or corporation.

Alongwith this, the entire agreement which details the sum, the repayment of the money and the securities pledged as a colleteral should be entered into. This will detail all terms and conditions between you and your friend,

You can find such agreement at http://www.docstoc.com/docs/6466424/Collateral-Pledge-Agreement

I hope the above helps...
Regards,

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Expert: Milan Vaishnav
Pos. Feedback: 99.5 %
Accepts: 
Answered: 6/29/2009

Financial Advisor

Technical Analyst in Financial Markets -- Experience of more than 10 years in consulting

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